Abigail Field has said it best here, in her article, “Hiding the Enforcement Fraud at the Heart of the Mortgage Settlement.”
Some facts, besides enforcement, were apparently so risky to let the audience see, they weren’t included in the complaint though naturally they would have been. That is, the complaint says only something vague about all the origination fraud the banks committed, though it details other kinds of wrongdoing:
“67. In the course of their origination of mortgage loans in the Plaintiff States, the Banks have engaged in a pattern of unfair and deceptive practices.” (see page 28 at B)
To understand how badly the bankers abused consumers when making loans, you need to read the relevant section of the federal release …
“D. The United States further contends that it has certain civil claims based on the … following conduct: …
[lists 13 different kinds of bad stuff]
Why is detailing origination fraud in the document the public is most likely to read risky? Well, consider origination fraud type (e):
(e) Valuing the properties used as collateral for such loans…
(e) is talking about appraisal fraud, a topic that deserves much pointed attention at a time when so many borrowers are deeply underwater. But for the rampant, lender controlled appraisal fraud inflating the original principal balances, fewer people would be underwater, and those that are would be closer to the surface.
…I mean, it might be very difficult to maintain the irresponsible borrower stereotype if millions of people started focusing on origination fraud. And solving the underwater problem doesn’t pose such a moral hazard if all those balances were fraudulently inflated by the lenders, does it? Sticking all the origination fraud detail in the complaint looks like an effort to hide truth that could impact policy if only people knew it.
So there it is–for over the last year, “our” government has carefully steered your attention where it wants it, maintaining its tough on bankers, fair to the public illusion. Now Judge Rosemary Collyer has played magician’s assistant, signing off quietly, not risking redirecting the public’s carefully guided attention.
So here’s the bottom line: will the media and grass roots groups let the trick work all the way through election day? Or will they snap the public out it, break the spell? I mean, just imagine how angry voters would be if the enforcement fraud is seen clearly for what it is.
And then the big question is: will the new servicing standards promulgated by the Consumer Financial Protection Bureau be yet another exercise in misdirection and enforcement fraud? Or will Americans finally get some change we can believe in?